NEWS: Data General restructures:
Data General Strengthens Focus On Providing Storage and High-End Computing Solutions
WESTBORO, Mass.--(BUSINESS WIRE)--June 1, 1998--Data General Corporation announced today that it is implementing a worldwide restructuring that will strengthen the company's focus on providing storage and high-end, enterprise computing solutions.
"Companies like Data General who offer a broad line of servers are facing constant margin pressure from competitors that use the lower-cost PC server distribution model," said Data General President and Chief Executive Officer Ronald L. Skates. "Therefore, we are expanding our enterprise selling strategy and restructuring our business accordingly. These changes will position us to compete successfully in the higher-margin enterprise marketplace where our expertise, technology and support capabilities are best suited. Our focus on high-end enterprise computing means the elimination of some functions, including discontinuing future development activities related to THiiN Line Internet appliances. Our objective is to return to sustainable growth and profitability."
The core of Data General's business is based on AViiON servers, CLARiiON storage, and related professional and customer services.
As part of the reorganization, approximately 100 people from other organizations will transfer to the CLARiiON Advanced Storage Division. After the transfer, the reorganization will result in a workforce reduction of approximately 400 people throughout the company's worldwide operations. The company will also consolidate certain facilities, and write-off non-strategic assets. As a result, Data General will incur a charge of approximately $125 million in the current (third) fiscal quarter, ending June 27. Approximately one-third of the charge will result from personnel-related costs. The balance of the charge relates to the write-off of software-related investments and other assets, as well as to provisions for real estate and other reorganization costs. The company expects savings in the range of $50 to $55 million annually from the reorganization, of which approximately $10 million will be re-invested in its CLARiiON business.
The AViiON Server Division, under the direction of Vice President Ethan Allen, has been realigned to focus on providing enterprise solutions based on Microsoft Windows NT Server and high-end UNIX solutions using NUMA technology. The Division also plans to expand its sales and marketing efforts within the healthcare industry.
"NT has been our fastest growing area for the past three years and is now nearly 60 percent of our total Intel based AViiON revenues," said Mr. Allen. "With our enterprise focus, our sales approach will change to a solutions and services oriented strategy based on enterprise NT applications from major software partners. In addition, we will continue to work closely with selected vertical applications partners, with large systems integrators and with regional integrators in areas where we have an established customer base."
"We have used this solutions sales approach in the healthcare marketplace for more than 20 years and it has been very successful, with our servers being used in more than 1,200 hospitals in the US," said Mr. Allen. "The key to this has been our ability to provide comprehensive solutions, including network and integration services. With healthcare increasingly moving to NT, we believe we can continue to increase our healthcare marketshare in the US, and also in International markets where we believe we have a major opportunity for growth."
As a result of the reorganization, the CLARiiON Advanced Storage Division, headed by Senior Vice President Joel Schwartz, will have increased sales and R&D resources to support its efforts to market fibre channel RAID storage products to the enterprise NT and UNIX marketplaces. The CLARiiON sales force will be expanded to create greater demand for fibre channel storage for the division's channel partners and to identify additional opportunities.
Data General has a solid base of companies, including Bull, Hewlett-Packard and NEC, which currently resell CLARiiON storage systems. In addition, Dell Computer, the industry's fastest growing server company, has announced that it will market CLARiiON fibre channel technology with its servers later this year.
"We are confident that fibre channel will become the dominant storage technology, and with our leadership position in this technology, a major growth area for us," said Mr. Schwartz.
Data General reached an important milestone in mid-May when it began shipping its full fibre channel CLARiiON systems to OEMs and channel partners.
With the restructuring, the company now has four functional groups reporting to Mr. Skates. The AViiON Server and CLARiiON Storage Divisions both have full responsibility for the marketing, sales and research and development of their products. Manufacturing, internal information systems and customer services are directed by Senior Vice President William Cunningham. Senior Vice President Arthur DeMelle heads finance, legal and human resources.
"We believe we are now much better positioned to succeed in the high-end enterprise server and storage markets," said Mr. Skates. "A return to profitability will not be immediate, but, as we implement our enterprise solutions strategy and benefit from a strong market for our fibre channel storage systems, we should see stronger revenues and more positive results."
-0- Statements concerning the company's business outlook, anticipated profitability, revenues or expenses, and product line growth, together with other statements made in this press release which are not historical facts, are "forward-looking statements" as that term is defined under the Federal Securities Laws. Such statements are subject to risks and uncertainties which could cause actual results to differ materially from those projected. Such risks and uncertainties include, but are not limited to, fluctuations in customer demand, order patterns and inventory levels, changes and delays in product development plans and schedules, customer acceptance of new products, changes in pricing or other actions by competitors, general economic conditions, as well as other risks detailed in the company's filings with the Securities and Exchange Commission, including Data General's Report on Form 10-K for the 1997 fiscal year which ended September 27, 1997 and first quarter 10-Q.
Note - Information on Data General, its products and services, can be accessed on the Internet at dg.com.
AViiON and CLARiiON are registered trademarks of Data General Corporation.
CONTACT:
Data General Corporation
Jim Dunlap, 508/898-6546
jim-dunlap@dg.com |
